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The role of regulation for sustainable infrastructure innovations. The case of wind energy

: Walz, R.


International Journal of Public Policy 2 (2007), No.1/2, pp.57-88
ISSN: 1740-0600
Journal Article
Fraunhofer ISI ()
innovation and regulation; sectoral system of innovation; wind energy; renewable energy; infrastructure system; feed-in tariff; climate policy; electric utility regulation; innovation policy

Regulation is especially important for infrastructure systems (such as wind energy), which are characterised by a triple regulation challenge in the areas of R&D spillovers, environmental protection, and access to monopolistic
bottlenecks. A heterodox approach is used to study the effects of regulation, which starts from a system of innovation and distinguishes different innovation functions. These functions are used as a bridge to incorporate the various
paradigms of the effects of environmental and natural monopoly regulation explicitly into the analysis.
Case studies for Germany and the USA show that despite an early start, the US innovation system has not worked sufficiently until now. In contrast, regulations in Germany provided for a high functionality of the innovation system wind power, which enabled Germany to catch up internationally. The importance of instrument design highlights that the analysis of the interaction between regulation and innovation must be performed on a rather detailed level.